A report finds that the IRS has trouble tracking paid tax preparers

The Internal Revenue Service cannot easily keep track of paid tax preparers, nor of their compliance with tax laws, according to a new report by the Treasury Inspector General of Tax Administration.

To track their activities, TIGTA recommended that the IRS should require paid preparers to use unique identification numbers when filing their clients' tax returns. Preparers currently are required to identify themselves on returns filed on behalf of clients by using either their Social Security or Preparer Tax Identification Numbers. However, IRS data on preparers is stored on 22 different systems that do not integrate with each other.

"The IRS currently is not able to track, monitor or control preparers' activities and compliance, or even determine the total number of paid tax return preparers," said TIGTA Inspector General J. Russell George.

TIGTA found that tax preparers are using multiple ID numbers, making it difficult to keep track of them. Even when the IRS does have tracking data, it may not be accurate. Using a statistical sample of 139 tax preparers, TIGTA found that multiple identifying numbers were used by 93 of them. The names of the 139 preparers in various systems were inconsistent 45 percent of the time. There were inconsistencies in 24 percent of the preparers' street addresses listed in the various systems, while telephone numbers varied 40 percent of the time.

In response to the report, the IRS said that it would develop a preparer database and begin imposing penalties on preparers who do not provide identification numbers. It agreed in principle with TIGTA's other recommendations.

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